Submitted by Mandy on May 9, 2016 - 12:37pm
Our bid to End Tax Havens hit full swing this week with a joint letter from 300 leading economists from 30 countries urging global bodies to bring financial secrecy to an end, ahead of the UK Government’s Anti-Corruption Summit on Thursday.
Signatories include Thomas Piketty, author of ‘Capital in the Twenty-First Century’; Angus Deaton, the current Nobel Prize-winner for Economics and former IMF chief economist Olivier Blanchard.
Oxfam, which co-ordinated the letter, is calling for world leaders to agree plans to end offshore secrecy globally, so that closing loopholes in one haven doesn’t result in tax dodgers moving their business to another.
Here’s the letter:
Dear world leaders,
Dear world leaders,
We urge you to use this month’s anti-corruption summit in London to make significant moves towards ending the era of tax havens.
The existence of tax havens does not add to overall global wealth or well-being; they serve no useful economic purpose. Whilst these jurisdictions undoubtedly benefit some rich individuals and multinational corporations, this benefit is at the expense of others, and they therefore serve to increase inequality.
As the Panama Papers and other recent exposés have revealed, the secrecy provided by tax havens fuels corruption and undermines countries’ ability to collect their fair share of taxes. While all countries are hit by tax dodging, poor countries are proportionately the biggest losers, missing out on at least $170bn of taxes annually as a result.
As economists, we have very different views on the desirable levels of taxation, be they direct or indirect, personal or corporate. But we are agreed that territories allowing assets to be hidden in shell companies or which encourage profits to be booked by companies that do no business there, are distorting the working of the global economy. By hiding illicit activities and allowing rich individuals and multinational corporations to operate by different rules, they also threaten the rule of law that is a vital ingredient for economic success.
To lift the veil of secrecy surrounding tax havens we need new global agreements on issues such as public country by country reporting, including for tax havens. Governments must also put their own houses in order by ensuring that all the territories, for which they are responsible, make publicly available information about the real "beneficial" owners of company and trusts. The UK, as host for this summit and as a country that has sovereignty over around a third of the world’s tax havens, is uniquely placed to take a lead.
Taking on the tax havens will not be easy; there are powerful vested interests that benefit from the status quo. But it was Adam Smith who said that the rich "should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion." There is no economic justification for allowing the continuation of tax havens which turn that statement on its head.
“This abusive global system needs to be brought to a rapid end. That is what is meant by good governance under the global commitment to sustainable development,” said Jeff Sachs, an adviser to UN Secretary General Ban Ki-moon.
“Tax havens do not just happen. The British Virgin Islands did not become a tax and secrecy haven through its own efforts. These havens are the deliberate choice of major governments, especially the United Kingdom and the United States, in partnership with major financial, accounting, and legal institutions that move the money.”
Of course, it’s the poor who suffer the most from these injustices as evidenced by our research in Malawi – a country of 16 million of whom half live in poverty. Although it’s impossible to get the full picture, Oxfam’s research of HSBC accounts in Geneva following the Swiss leaks shows that lost tax revenue could pay for 800 nurses for one year. Currently there are three nurses for every 10,000 people.
“The recent explosion in the wealth of the super-rich has come at the expense of the majority and particularly the poorest people,” says Winnie Byanyima, Oxfam’s Executive Director.
“Governments, the UN, the IMF and the World Bank also need to lay the groundwork for a second generation of global tax reforms to crack down on corporate tax dodging that goes beyond current piecemeal proposals."
And on a lighter note, our Spanish team punked a few coffee swillers to illustrate the injustice of the tax system.
If you're outraged at picking up the tab for multinationals, sign here: